Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Taikun who wrote (58554)	1/9/2005 2:51:57 AM
From: energyplay	Read Replies (1) of 74559

Hi Taikun - Many of the naked shorts are - 1) ADRs. Would not be surprise if the naked shorter owns the stock in the foreign country. It may be possible to take those foreign shares to the sponsoring bank to get more ADRs listed. 2) Closed end funds, especially those at high premiums. I expect that many of the shorters own some the underlying components. CHN, China fund and Gabelli Utility trust. In these cases I don't think there is much systemic risk to the trading system. If there is a high price to cover the short, the ownership of the underlying will provide funds. **** Some are favorites of the shorts, and there was likely abuse here - like KKD Krispy Kreme and AMR American Airlines. Lots of day trading in these, so settlements may just be late. The Stock Exchange survived this before in the 1960s and 1970s, when volume went so high settlmnets took a week.... ********** Still, some people are gaming the system successfully.

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